HSBC Greater Bay Area ESG Index

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2023 Q3 report released!

GBA's first ESG (Environmental, Social, and Governance) index, launched by HSBC last year, has been used to track progress of ESG movement within the area.

The first ESG index of the GBA in the market.

A combination of macro and micro methodologies that is internationally aligned, and locally adapted.

Evaluating and tracking the GBA’s sustainable development.

Inaugural ESG Index in GBA

As one of China's most open and economically vibrant areas, the GBA’s Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area includes sustainable development concepts such as green development and improving people’s livelihood. HSBC has released the first GBA ESG Index in Q4 2022 to effectively reflect the status and direction of sustainable development in the GBA.

Developed in partnership with China Energy Conservation and Environmental Protection Group(CECEP) Environmental Consulting Group Limited, a consultancy specialising in sustainable management as well as green and sustainable finance, the HSBC GBA ESG Index provides holistic insights into the area’s sustainable development.

The GBA ESG Index uses a combination of macro and micro methodologies and is updated quarterly. As well as the main GBA ESG Regional Index, a number of sub-indices are compiled, including City Sub-indices, Industry Sub-indices and Sub-indices by company size. The GBA ESG Index aims to objectively reflect and track the GBA’s sustainable development and its ESG. 

From a macro perspective, we analyse the region, cities and industrial characteristics from five areas, namely policy, environment, economic and social development, corporate governance, and green and sustainable finance. The ESG performance of companies is evaluated from a micro perspective using the following five first-level indicators: environmental, social, governance, green and sustainable finance and external assurance. To these an adjustment indicator, ESG reputation, is added which takes negative or controversial ESG events into consideration.

The ESG performance in the GBA recorded continuous improvement in Q3, reflecting the ongoing progress of the region’s green transition.

Daniel Chan | Head of Greater Bay Area, HSBC

Q3 2023 Key Highlights

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Our study showed a 3% year-on-year increase to 118.04 in the Greater Bay Area ESG Regional Index over the third quarter of 2023. The policy performance reached a record high, indicating that the Greater Bay Area policies are increasingly supporting sustainable development; At the same time, the performance in the field of environment and corporate governance is relatively stable; In the areas of economic and social development, green and sustainable finance, there is a downward trend.

The governments within the GBA continued to strengthen policy regarding ESG and sustainable development in the third quarter of 2023, specifically highlighting environmental, economic, and social issues, such as the development of green industries, private economy, and innovation. Notably, Guangzhou, Shenzhen, and Foshan implemented policies in the third quarter to support the development of the local private sector economy and addressed important issues related to its development.

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Aligned with the national trend in the GSSS bond (green bond, social bond, sustainability bond, and sustainability-linked bond) market, the issuance of GSSS bonds in the Greater Bay Area significantly decreased in the third quarter of 2023 compared to the second quarter of 2023 (1/3 ). However, the government continues to support the market’s development. The Hong Kong government, the main contributor to large GSSS bonds in the first half of 2023, will issue a new batch of retail green bond with a target size of HK$15 billion in the fourth quarter.

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The average value of the GBA ESG Industry Sub-indices increased 21% year-on-year to 175.69 in the third quarter of 2023. Of the eight key sectors focused on in the report, most showed an in ESG in Q3, with the financials and real estate sectors showing the most significant growth. The industrials sector has maintained its leading position in ESG performance with better climate-related disclosure and more aggressive emission reduction targets.

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For the sustainable development of the transportation industry, a sub-sector of industrials, in addition to the innovative practices of ship transportation and logistics enterprises in energy conservation and emission reduction, the adoption of cleaner biofuels, the application of digital technology to monitor carbon emissions and make timely adjustments, governments at all levels in the Greater Bay Area are also actively encouraging the public to travel green. To promote the green development of the transport industry in the Greater Bay Area. For the energy sector, the Greater Bay Area has developed corresponding response measures and has made remarkable progress in clean energy production, transportation and energy storage, green hydrogen energy and improving the efficiency of traditional energy.

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